Lending by big Philippine banks grew 11.8 percent to P13.188 trillion in March from P11.795 trillion a year earlier, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
Compared with February, however, the percentage rate of increase in March slowed from 12.2 percent in the second month of the year, when lending totaled P13.03 trillion, BSP data showed.
Of March’s total lending, 97.5 percent, or P12.86 trillion, represented outstanding loans to residents, while the rest, valued at P323.1 billion, went to non-residents.
The residents’ outstanding loans increased by 12.3 percent year-on-year, while those for non-residents dropped 5.6 percent.
The BSP said loans for production activities rose 10.9 percent in March from 11.2 percent in February.
Slower expansion
“Loan growth eased due to the slower expansion in lending to key industries such as real estate activities; wholesale and retail trade, repair of motor vehicles and motorcycles; information and communication; construction; arts, entertainment and recreation; water supply, sewerage, waste management and remediation activities; and, accommodation and food service activities,” the BSP said.
Consumer loans to residents grew by 23.6 percent to P1.64 trillion in March from P1.324 trillion a year earlier.
The BSP said higher credit card loans, motor vehicle loans, and salary-based general-purpose consumption loans drove this growth.
M3 money supply
In a separate statement, the BSP said preliminary data showed that domestic liquidity, or M3, expanded by 6.1 percent year-on-year to P18.2 trillion in March from P17.2 trillion a year earlier.
M3 comprises circulation currency, bank deposits, and deposit substitutes, such as commercial papers and promissory notes.
Domestic claims rose 10.4 percent year-on-year to P20.7 trillion from P18.7 trillion in March last year.
Claims on the private sector increased by 11.5 percent in March to P13.2 trillion from P11.9 trillion a year ago.
The central bank said the sustained expansion in bank lending to non-financial private corporations and households drove claims on the private sector.
Net claims on the central government increased by 8.0 percent to P5.5 trillion from P5.2 trillion in March last year “due to higher borrowings by the national government.”
More rate cuts expected
“Lending remains robust but could benefit from additional rounds of easing,” Metrobank chief economist Nicholas Antonio Mapa said.
Mapa expects the Monetary Board, which sets policy, to cut key rates in June “should the inflation outlook remain manageable.”
Banker and economist Alex Escucha said the slowdown reflects a “wait and see” mode triggered by heightened risk perceptions related to the Trump tariffs.
“Businesses are slowing down borrowing in anticipation of lower lending rates” as the BSP is expected to continue rate cutting through the rest of the year. Escucha said they are shifting to shorter-term loans, then to longer maturities later when the rates are lower.
Escucha sees consumer lending growth reflectin “steady consumer confidence, underpinned by sustained OFW remittances and BPO inflows.”
Cautious borrowing
John Paolo Rivera, research fellow at the Philippine Institute for Development Studies, said the slight downward moderation “reflects base effects from high growth in the previous months.”
Rivera said this shows early signs of cautious borrowing by firms and households amid persistent global uncertainties, particularly around trade and inflation.
He said it also reflects the lag effect of high interest rates, even as the BSP pivots toward easing.
“Despite the slowdown, double-digit lending growth signals resilient credit demand, particularly in the consumer and real estate sectors, and reflects confidence in economic activity. However, further deceleration could occur in Q2 if trade tensions persist or if inflation risks resurface,” Rivera added.
